In the traditionally male-dominated field of financial advice, a glaring gender gap persists with women making up only 15-20% of professionals in the industry.1 A Carson Group study found women in wealth management face distinct barriers, notably caregiving obligations and a male-dominated culture, which significantly impacts their career trajectories.2 Moreover, the study highlighted flexibility as the foremost benefit firms can provide to attract and retain female financial advisors.2 For advisory firms, embracing gender equality not only addresses a critical societal concern but also presents an immense opportunity. The future of wealth management will be shaped by women as they control an increasing share of the nation’s assets. Therefore, fostering an environment that supports and promotes female professionals should become a pivotal focus for any financial advisory firm.
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The Business Case for Gender Diversity in Finance
The opportunity for firms that promote equality is substantial. Women already wield significant financial influence, controlling approximately $14 trillion in household assets, a figure expected to nearly double by the end of this decade.3,4 This wealth transition will accelerate as baby boomers, recognized as the wealthiest generation in history, pass down over $30 trillion in assets.4 Women are poised to inherit the majority of this wealth transfer, both as surviving spouses and descendants.
To effectively tap into this growing wealth base and attract female clients, it is crucial for financial advisory firms to acknowledge the preference of many women for female advisors. A 2013 study conducted by the Insured Retirement Institute revealed that 70% of women seeking a financial advisor would prefer to work with a female professional. The desire for female advisors is grounded in the need for a personalized, empathetic approach and shared experiences. Women want to be listened to; they want to be understood. Often, male advisors establish stronger connections with men when working with couples, potentially overlooking the financial concerns and objectives of women. This dynamic is evident in the astonishing fact that over 80% of widows choose to change the financial advisor initially selected by their spouses.5
Moreover, female advisory clients often seek an educational experience that empowers them to be more proactive and responsible in managing their finances. Women prefer meaningful conversations that engage and inform rather than passive monologues. Advisors should provide tailored content and educational opportunities specific to the needs and preferences of their female clients. It is essential to recognize that merely having a female advisor in a client-facing role is insufficient; prioritizing the support and empowerment of female clients must be a central focus.
In light of the impending shift in wealth ownership, with women poised to control the majority of the nation’s wealth in the coming years, financial advisory firms that fail to adapt to the needs and preferences of female clients will face significant challenges in remaining competitive and thriving in the industry. Embracing gender diversity and catering to the unique requirements of female clients is not only a matter of ethical responsibility but also a strategic imperative for the long-term success of advisory firms.
Cracking the Glass Ceiling: The Silent Pressures on Women
Support for equal representation in the industry is nearly universal. 90.7% of men and women recognize underrepresentation as a significant problem that demands attention from firms.2 Yet the data paints a starkly different reality. The American College of Financial Services finds that only one-third of advice firms had women in client-facing roles.2 Caregiving responsibilities emerge as the primary obstacle for female financial advisors, which can significantly deter career advancement.2 These obligations, which encompass caring for children, elderly family members, or individuals with special needs, impose significant demands.
Societal and cultural pressures play a role as well. Women have long been expected to assume the role of family caregiver. These traditional gender roles persist in society and influence the choices women make regarding their careers. Public portrayals of women, often depicted as stay-at-home mothers or engaged in nurturing roles such as nursing or teaching, further reinforce conventional expectations. Additionally, women often lack the support to effectively balance their family responsibilities with their professions. Businesses can accommodate these material constraints with flexible working policies.
Another obstacle for women in finance is the difficulty in finding a firm that aligns with their cultural values. The financial industry has traditionally adhered to certain cultural norms that may not always accommodate the needs and aspirations of female advisors. To foster an inclusive culture, firms must promote more women to leadership roles and adopt zero tolerance policies on discrimination. A policy without enforcement is not a solution, nor does it promote an inclusive culture.
Fostering Inclusivity and Flexibility
Addressing the underrepresentation of women in finance is not a quick fix; societal expectations evolve gradually over generations. Promoting gender equality and challenging traditional gender roles are vital steps towards making women’s participation in traditionally male roles more commonplace. Furthermore, it is important to support and accept men who choose to take on caregiving roles, as this too can help break down traditional stereotypes and expectations. Recognizing these challenges and actively working to create a more inclusive and supportive environment for women in finance is essential for fostering diversity and gender equality in the industry.
In addressing the need to attract more female advisors, firms must prioritize flexibility as a non-negotiable solution.2 It is not a matter of women seeking reduced work hours; rather, it’s about providing the ability to balance the multifaceted demands on their attention. The recent pandemic underscored the importance of flexibility in work arrangements and has permanently reshaped the way Americans work. Statistics reveal that 58% of Americans now have the capacity to work remotely at least part of the time, and 87% of employees take advantage of flexible work options when given the opportunity.6 It’s little surprise that the employment-to-population ratio for women 25-54 recently reached an all-time high.
However, certain stalwarts in the financial industry, including giants like Goldman Sachs and Citigroup, are attempting to enforce a return to the traditional office environment and encountering resistance from workers. Such moves risk disenfranchising women and impede a company’s ability to attract top talent. As the landscape of asset management leans increasingly toward female influence, businesses that resist adopting flexible policies may find themselves at a distinct disadvantage.
- https://www.barrons.com/articles/women-make-great-financial-advisors-so-why-arent-there-more-51559952001
- https://resources.carsongroup.com/hubfs/Email%20Assets/CG_2022StateofWomeninWealthManagementReport_Guide_110822_V7_FINAL_DIGITAL%20(1).pdf?utm_campaign=CG%20%7C%20Nurture%20%7C%20Women%20in%20Wealth&utm_medium=email&_hsmi=251647867&_hsenc=p2ANqtz-_B-zOr_rw62whR3kFMlAqXL3uEVh3qVrAiBV9zrPqJ3HrIPIZrj8g20Qtf8FI0UIwVpRr5dzUYQla3Ht78Uf5gCFUilRbJkVTOh2sze4bdqJhsqfs&utm_content=251647867&utm_source=hs_automation
- https://www.morganstanley.com/articles/female-invest-women-and-wealth#:~:text=The%20Future%20of%20Wealth%20Is%20Here&text=in%20wealth%20management.-,Women%20control%20a%20third%20of%20total%20U.S.%20household%20financial%20assets,that%20baby%20boomers%20will%20possess.
- https://www.newyorklifeinvestments.com/assets/documents/lit/women-and-investing/women-investing-analytical-report.pdf
- 5 https://www.kiplinger.com/personal-finance/602892/widows-move-forward-on-their-own-but-not-alone
- 6 https://www.mckinsey.com/industries/real-estate/our-insights/americans-are-embracing-flexible-work-and-they-want-more-of-it
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